ACP to Take Effect in 2027, but Impact Is Immediate

First Recognized in Supreme Court Criminal Case

"Insufficient Guidelines, Rights Must Be Asserted Proactively"

With the implementation of the Attorney-Client Privilege (ACP) system set for one year from now, the Supreme Court recognized ACP in a decision on February 20, fueling expectations that ACP will be immediately applied in criminal proceedings. However, as investigative and supervisory agencies still lack concrete guidelines, lawyers as well as corporate legal and compliance teams are expected to proactively assert their rights and thoroughly understand the purpose of the system in practice. It has become increasingly important to ensure that materials related to legal advice are managed in such a way that their eligibility for ACP protection is clear, even based solely on their appearance and format, during day-to-day work.

The ACP system is scheduled to take effect on February 20, 2027. The amendment to the Attorney-at-Law Act, which introduces ACP, stipulates the right not to disclose 'confidential communications' between lawyers and their clients or potential clients, as well as 'documents and materials' related to retained cases.

The Supreme Court recently recognized ACP in a criminal case. The First Criminal Division of the Supreme Court (presiding Justice Shin Sookhee) on February 20 finalized a lower court's decision to cancel the prosecution’s search and seizure order for legal consultation materials exchanged between defense counsel and client (2024mo730).

Legal professionals believe that this ruling, together with the amendment to the Attorney-at-Law Act, provides a solid basis for actively asserting ACP protection. Article 2 of the supplementary provisions of the amendment stipulates that ACP regulations apply even to communications and work products created prior to the law's enforcement date.

Minho Roh (41st Judicial Research and Training Institute), attorney at Bae, Kim & Lee LLC, stated, "ACP is not a lawyer's right, but a right to protect the client's confidentiality," adding, "With the recent Supreme Court decision, it is interpreted that ACP will be applied immediately, at least in criminal proceedings."

The need for the ACP system has long been raised amidst criticism of widespread search and seizure practices in large corporate cases. This is due to concerns that it is difficult to build a practical response system, given the risk that records related to corporate legal or compliance matters could be extensively leaked during investigations.

Whether ACP applies to in-house counsel remains a contentious issue. While the amendment to the Attorney-at-Law Act does not explicitly exclude in-house counsel, there is concern that investigative agencies may view the relationship between the company and its in-house counsel as a mere employment relationship and thus deny ACP protection.

Consequently, for the ordinary work of in-house counsel to be protected by ACP, the key criterion will be whether communications with in-house counsel constitute confidential communications for the purpose of legal advice. If in-house counsel directly handles litigation and is formally retained for a case, it is likely that the nature of the retained case will be recognized, making protection relatively clear.

The most contentious scenario is the 'internal investigation' within a company. Because in-house counsel are employed by the company, it may be difficult to recognize the same level of independence as external counsel, and such opinions may be raised.

In the United States, communications between in-house counsel and employees are generally protected under the 'Upjohn Test.' The U.S. Supreme Court ruled that statements made by employees of Upjohn Company to in-house legal counsel regarding overseas bribery cases were protected by ACP, establishing requirements such as: the communication must be for the purpose of legal advice, must relate to the employee's work scope, and there must be an intention to keep the communication confidential. However, if materials subject to ACP are shared with third parties unrelated to the advice, courts may find that confidentiality has been breached and deny ACP protection on the grounds of 'waiver.'

For these reasons, it is recommended that companies minimize the recipients and those copied on legal advice-related communications to only those who are necessary. Also, since there is still no clear domestic precedent regarding ACP protection for in-house counsel, companies may need to invoke U.S. case law to argue that such communications should be protected.

Amid the abolition of the prosecution service and the expansion of police investigative authority, attention is focused on how ACP will be applied in actual investigations. At the 'Post-ACP Adoption Corporate Investigation Response and Legal/Compliance Strategy' seminar hosted by Bae, Kim & Lee LLC on March 9, Park Sungbeom (4th Bar Exam), a lawyer at Bae, Kim & Lee and former police officer, commented, "Field investigators say that concrete guidelines have not yet been established. Even though procedural compliance is increasingly emphasized in recent investigations, unless ACP protection is asserted strongly, it may be difficult to receive proactive protection."

Reporter Seo Hayeon, The Law Times

※This article is based on content supplied by Law Times.

This content was produced with the assistance of AI translation services.